EPS of $-0.25 increased by 10.7% from previous year
Gross margin of 89.2%
Net income of -57.33M
"AI Studio has the potential to eclipse our current revenue scale over time." - Dustin Moskovitz
Asana Inc (ASAN) QQ3 2025 Results - AI Studio Momentum Amidst Stabilizing Growth: Upmarket Diversification and Value-Driven Pricing
Executive Summary
Asana delivered a solid QQ3 2025 performance with revenue of $183.9 million, up 10% year over year, supported by broad-based strength outside the tech vertical and early traction from the AI Studio initiative. The company is transitioning from a pure seat-based model to a blended, value-based framework that includes platform fees, add-ons, and consumption-based AI Studio pricing. While GAAP profitability remains negative (operating loss of $60.2 million; net loss of $57.3 million; EPS -$0.25), management guided to improved non-GAAP margins and positive free cash flow by the end of Q4 2025, signaling strategic progress toward profitability. The AI Studio launch is a strategic hinge: early access customers indicate stickiness, cross-sell potential, and high incremental value beyond traditional seat-based licensing, with GAAP revenue not yet meaningfully recognizing AI Studio, but with expectations for material upside as adoption scales in FY2026. Net retention is stabilizing at 96% overall (core 98%, $100k+ 99%), while annualized RPO reached $405.7 million, up 21% year over year and 82% of RPO to be recognized in the next 12 months, underscoring durable revenue visibility. Management stressed ongoing vertical expansion (manufacturing, consumer retail, healthcare, energy, government via FedRAMP) and cost discipline to drive FCF and margin expansion in 2026. The ultimate investment thesis hinges on AI Studio’s monetization trajectory, efficiency gains from upmarket expansion, and the speed with which the monetization mix pivots toward higher-margin, value-based offerings.
Key Performance Indicators
Revenue
183.88M
QoQ: 2.61% | YoY:10.44%
Gross Profit
164.08M
89.23% margin
QoQ: 3.05% | YoY:9.06%
Operating Income
-60.18M
QoQ: 21.64% | YoY:5.11%
Net Income
-57.33M
QoQ: 20.59% | YoY:7.16%
EPS
-0.25
QoQ: 19.35% | YoY:10.71%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $183.882 million in Q3 FY2025, up 10.4% YoY; QoQ growth approx. 2.6% (from $179.212 million in Q2 FY2025)
Net income: -$57.326 million; net income margin -31.18%
EPS (GAAP): -$0.25; EPS diluted: -$0.25
Financial Highlights
- Revenue: $183.882 million in Q3 FY2025, up 10.4% YoY; QoQ growth approx. 2.6% (from $179.212 million in Q2 FY2025)
- Gross Profit: $164.084 million; gross margin 89.23%
- Operating income: -$60.18 million; operating margin -32.73%
- Net income: -$57.326 million; net income margin -31.18%
- EPS (GAAP): -$0.25; EPS diluted: -$0.25
- Non-GAAP operating margin improved to ~-4% YoY (from -6% in prior year), per management commentary
- Free cash flow: -$18.2 million; FCF margin -10% (Q3) with expectation of positive FCF in Q4
- RPO: $405.7 million, +21% YoY; 82% of RPO to be recognized in next 12 months; current portion up 17% YoY
- Deferred revenue: $282.1 million, +10% YoY
- Cash and equivalents: ~$455.3 million; net debt: approximately $32.3 million
- Customers: 23,609 core customers; 683 customers >=$100k annualized revenue; Core revenue accounted for 75% of total
- Dollar-based net retention rate (DBNRR): Overall 96%; Core 98%; $100k+ cohort 99%
- Guidance: Q4 revenue guidance $187.5–$188.5 million; FY2025 revenue guide $723–$724 million; non-GAAP loss from operations $-6.5M to $-5.5M for Q4; FY2025 non-GAAP NOP$ at $-0.14 to $-0.15 per share; target positive free cash flow by end of Q4
- AI Studio monetization timeline: GAAP revenue impact not material in Q4; expects meaningful uplift in FY2026 as adoption expands
- Key operational emphasis: expand verticals, expand upmarket, drive post-sales experience, and accelerate cross-sell and add-ons; FedRAMP for government sector
- Balance sheet health: solid liquidity, growing non-GAAP margins, and a levered path to margin expansion via cost optimization and AI integration
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
183.88M
10.44%
2.61%
Gross Profit
164.08M
9.06%
3.05%
Operating Income
-60.18M
5.11%
21.64%
Net Income
-57.33M
7.16%
20.59%
EPS
-0.25
10.71%
19.35%
Key Financial Ratios
currentRatio
1.49
grossProfitMargin
89.2%
operatingProfitMargin
-32.7%
netProfitMargin
-31.2%
returnOnAssets
-6.56%
returnOnEquity
-24%
debtEquityRatio
0.96
operatingCashFlowPerShare
$-0.06
freeCashFlowPerShare
$-0.07
priceToBookRatio
11.46
priceEarningsRatio
-11.96
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- AI Studio value proposition and pricing: Dustin Moskovitz highlighted that AI Studio represents a new consumption-based revenue opportunity that is not seat-based and could eclipse current revenue scale over time as adoption scales: "AI Studio has the potential to eclipse our current revenue scale over time." (Dustin Moskovitz)
- Early use cases and viral activation: management emphasized that initial adoption shows AI Studio being embedded in ongoing workflows, leading to stickiness and upsell opportunities; an example of rapid workflow executions (4,500 in first month, now >20,000) underscores latent monetization: Dustin noted, "one builder, two builders can create a tremendous amount of value and results in a big incremental revenue opportunity" and cited viral activation among power users.
- Upmarket acceleration and vertical focus: Anne Raimondi discussed multi-year deals, FedRAMP progress, and success in verticals including manufacturing, retail, healthcare, and cyber; she highlighted the importance of executive alignment and the role of AI Studio in expanding ARR and deal velocity: "multi-year deals and expansions are pointing to longer term partnerships" and FedRAMP is enabling government and regulated sectors.
- NRR stabilization and post-sales investments: Sonalee Parekh and Anne emphasized stabilization of in-quarter NRR and improvements in post-sales investments that are expected to lift retention and expansion, with constant reference to non-GAAP profitability objectives and margin expansion opportunities.
- Pipeline and guidance context: Dustin and Sonalee stressed the macro backdrop remains challenging, but execution in GTM and vertical specialization is driving stabilization and potential re-acceleration; the Q4 guide implies modest sequential acceleration and a path toward positive free cash flow in FY2026.
AI Studio has the potential to eclipse our current revenue scale over time.
— Dustin Moskovitz
Our in-quarter dollar-based-net-retention rates are stabilizing and Q3 DBNRR was slightly better than Q2.
— Anne Raimondi
Forward Guidance
- Short-term view: Q4 FY2025 revenue guidance of $187.5M–$188.5M implies around 10% YoY growth, consistent with a stabilizing revenue trajectory amid macro pressures. Non-GAAP operating loss of $5.5M–$6.5M and negative net income per share reflect ongoing investments in AI Studio, GTM enhancements, and vertical expansion. Management indicates AI Studio monetization remains non-material in Q4, with meaningful upside emerging in FY2026 as adoption broadens.
- Medium-term view: AI Studio is positioned as a scalable, consumption-based add-on with platform fees and credits; management projects AI-driven revenue incremental potential that may exceed core seat-based revenue for select customers in the near term and diffuse expand across the base in the medium term. General guidance foresees positive free cash flow by end of Q4 and margin expansion in FY2026 via operating leverage, R&D optimization (including AI integration into core product), and more efficient GTM spend.
- Key levers to monitor: AI Studio adoption rate (per-quarter utilization and CPLs for credit tranches), progression of higher-margin add-ons and cross-sell, net retention trajectory as AI Studio value compounds, FedRAMP-driven government and regulated sector wins, enterprise deal velocity, and efficiency gains from rationalization of S&M, G&A, and third-party spend. Investors should watch for Q1 FY2026 monetization signals (initial AI Studio revenue and customer adoption metrics) and the pace of ARR expansion accompanying AI Studio roll-out.
- Risk factors: macro volatility impacting tech budgets and sales cycles, execution risk in transitioning to a blended pricing model, potential delays in AI Studio GA and integration, data security/compliance considerations, and competitive intensity in AI-enabled work management.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ASAN Focus
89.23%
-32.70%
-24.00%
-11.96%
BILL
81.20%
-1.72%
-0.30%
-101.19%
DDOG
80.00%
2.94%
1.97%
187.83%
GTLB
88.70%
-14.70%
4.08%
73.32%
TEAM
83.80%
-0.92%
16.50%
61.84%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Asana sits at a pivotal inflection point, leveraging the AI Studio platform to transition toward a mixed revenue model that blends seat-based licensing with consumption-based AI-enabled offerings. The QQ3 2025 results confirm continued growth momentum and a stabilizing customer base, with AI Studio providing a high-potential tailwind for FY2026. The key to an upside trajectory will be AI Studio monetization speed, expansion into higher-margin add-ons, and successful execution of the upmarket GTM strategy (verticals, FedRAMP, and channel-led growth). The near-term risk is the continued macro headwind and the timing of AI Studio scale effects; however, the company’s balance sheet and durable RPO provide cash-flow visibility that supports a constructive long-term investment thesis for investors willing to tolerate near-term losses as AI investments mature. Investor takeaways: monitor AI Studio adoption metrics in Q4/Q1 FY2026, track the progression of non-GAAP margins toward positiveFCF, and evaluate ARR expansion driven by cross-sell in manufacturing, healthcare, and government verticals.
Key Investment Factors
Growth Potential
AI Studio is the primary growth catalyst with consumption-based pricing and the potential to surpass core seat-based revenue for some customers; growth will depend on adoption depth, cross-sell efficiency, and expanding TAM via FedRAMP verticals. Expect revenue mix to shift toward higher-margin AI-enabled offerings as UK/EMEA and FedRAMP deployments scale and as enterprise upsell accelerates.
Profitability Risk
Near-term profitability remains pressured by GAAP losses and substantial R&D and GTM investments; execution risk in scaling AI Studio monetization; reliance on customer adoption and price realization in a new consumption-based model; macro headwinds could prolong sales cycles or dampen cross-sell velocity.
Financial Position
Solid liquidity with $455.3M cash and equivalents; net debt ~$32.3M; RPO of $405.7M, with 82% to be recognized in the next 12 months; strong gross margin at 89.2% supports healthy margin expansion potential as AI Studio monetizes and operating leverage accrues.
SWOT Analysis
Strengths
Very high gross margin (~89%), indicating scalable software with strong unit economics.
AI Studio launch creates a new, consumption-based revenue stream with potential to exceed seat-based revenue for some customers.
Work Graph data model supports deep process integration and multi-LLM compatibility, enhancing enterprise credibility.
Large and growing healthy enterprise pipeline with multi-year deals and FedRAMP initiative improving government/regulated traction.
Non-GAAP profitability trajectory improving (operating margin improving to -4% YoY) and commitment to positive FC F by end of Q4.
GAAP net losses and negative free cash flow in QQ3 2025; still at negative profitability levels.
Short-term revenue growth remains modest (YoY +10%), exposing sensitivity to macro volatility; Q4 guide implies continued but modest top-line growth.
AI Studio monetization not yet material; near-term revenue upside relies on deployment pace, pricing realization, and broad adoption across customers.
Opportunities
Acceleration of ARR through AI Studio-driven cross-sell and up-sell across core and high-value customers; potential to expand into new geographies and regulated sectors (FedRAMP)
Broader enterprise and mid-market adoption via channel partners and new GTM motions; potential for faster deal closures with improved seller experience.
RPO expansion and multi-year deals continue to support revenue visibility and cash flow resilience.
Threats
Macro volatility and potential elongation of enterprise sales cycles; competition from other AI-enabled WCM platforms (and broader collaboration software) could pressure pricing.
Regulatory data/privacy requirements and security risk in AI deployments could constrain customer adoption or add compliance costs.
Execution risk in scaling AI Studio and maintaining high customer satisfaction with AI-enabled workflows.
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